My database on junk bond yields only goes back to October, 2002. Therefore, it is not the best series I have developed.

What stands out at the moment, however, despite the limited scope in the database, is that junk bond yields hit 7.0% today. They were never at this level before from 2002 to the present.

To me this suggests that investors feel a need to get a higher return on their cash hoards. Simply seeking safety in Treasury securities is not meeting the need of investors. Thus, the piling into junk bonds.

It is a short step from there into common stocks. In the case of banks, if investors choose to look, profits are very high and valuations are very low."